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Law360, London (August 13, 2020, 12:45 PM BST) -- British insurers have paid out £90 million ($118 million) in life insurance claims to the families of people who died from COVID-19 at the height of the pandemic, the Association for British Insurers said Thursday.
The trade body said insurers received 7,000 life insurance claims and paid the equivalent of £980,000 every day — £90 million in total — to families who lost loved ones to the coronavirus between March 1 and May 31.
The 7,000 claims were made up primarily of individual protection policies, with 351 being group claims. The association said it received an average of 77 claims a day during the height of the crisis. The data show that all life insurance claims made so far have been accepted and that 83% of all claims made have been paid out.
"Insurers have been doing all that they can to help families cope financially through these unprecedented and distressing times," Roshani Hill, assistant director and head of protection and health at the ABI, said.
The average payout on term insurance — a life insurance covering a fixed number of years — is expected to be £63,000, with an average payout of £137,000 on group policies, the ABI said.
Insurers, regulators and lawmakers have been in conflict over COVID-19 claims.
The Financial Conduct Authority urged insurers in March to show fairness and flexibility when assessing claims linked to the coronavirus. The watchdog repeated the warning in August, saying it would intervene if it found insurers acting unfairly in paying COVID-19 claims after small business groups complained that the industry was deducting the cost of government grants from payouts.
MPs also raised concerns in March about the response of the sector to the crisis and urged insurers to provide extensive data on how they planned to compensate Britons for virus-related losses. The ABI told the parliamentary Treasury Committee in April that it would pay out £1.2 billion to support individuals and businesses in travel insurance, wedding insurance and business cover.
The FCA is taking insurers to court to establish whether they should be forced to compensate companies for COVID-19 losses under business interruption policies.
The trial, taking place under the financial markets test case scheme, could decide whether insurers pay out on claims to an estimated 370,000 businesses forced to close during the U.K. lockdown, which began in March.
--Additional reporting by Martin Croucher and Najiyya Budaly. Editing by Ed Harris.
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